Deutsche Telekom heading Europe’s unbundled IP market

This week, Deutsche Telekom has submitted its first bitstream access charges for Federal Network Agency approval. In its first resolution on standard bitstream access passed in August 2007, the Federal Network Agency requested Deutsche Telekom to offer these products in the market on top of its existing wholesale portfolio from April 2008.

Deutsche Telekom has now applied for a monthly EUR 14.26 charge for IP Bitstream Access (IP-BSA), which comprises a DSL line for end-customers and transport in the broadband access network. Bitstream access is an add-on DSL wholesale product that makes it possible for providers without subscriber and access networks of their own to offer end-customers broadband services. Up to now, competitors could only implement these services with a wholesale DLS line (resale) in conjunction with a wholesale transport service (ZISP). The price that providers have to pay for these resale services with comparable technology is EUR 10.50 and EUR 11.50 for 6 and 16 Mbit/s lines. They have to add the usage-based transport service (ZISP) on top of this.

The IP bitstream for EUR 14.26 covers DSL access for end-customers and a data transport rate of 75 kbit/s. This wholesale price is one of the lowest in Europe: the average price for a comparable service in France is EUR 18.40, in Spain EUR 26.49 and in the UK as much as EUR 34.63. In view of the steady growth in network usage, the charges submitted for IP bitstream will help to stabilize price levels in the market. Since 2004, Deutsche Telekom has made around 3.5 million resale lines available to competitors. With the regulatory order on IP-BSA, the charges for wholesale services for DSL will be subject to regulation for the first time.

Deutsche Telekom has also applied for an “unbundled” IP-BSA charge of EUR 24.76. The unbundled option means that customers no longer procure fixed lines from Deutsche Telekom. The providers assume responsibility for the complete end customer line. This unbundled option is not available in many European countries such as the U.K., Spain and Ireland. Comparable services including 75 kbit/s data transport, in France for instance, cost over EUR 25 and in Austria the wholesale service is available from EUR 24.88.

The Bitstream Access charges now awaiting Federal Network Authority approval will have a major impact on future competition in Germany’s broadband market. From Deutsche Telekom’s viewpoint, the charge for BSA must not be allowed to disrupt the present equilibrium between infrastructure providers (subscriber and cable network operators, Wimax providers) and competitors who do not have their own infrastructure, for example the Internet service providers.

The charge for bitstream access, which requires only minimum infrastructure investments from competitors, must therefore not undercut current wholesale prices. This is the only way to maintain the incentives required for building powerful, state-of-the-art telecommunications networks in Germany.